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18. In this regard, the ld AR submitted that in the P&L A/c, the assessee has declared export sales of Rs.30,20,77,213/-. It includes excess recovery of freight, clearing & insurance expenses of Rs.5,75,388/-. This amount is net of the freight recovered from the customers on export of goods Rs.24,98,290/- and the freight expenditure incurred at Rs.19,22,902/-.The assessee has claimed deduction u/s 10AA at Rs.4,08,51,049/ (in the return Rs.4,08,51,804/-) calculated as under:-

20. It was further submitted that excess of freight, clearing & insurance receipt over the expenses is a business receipt as it is directly linked to the export. Hence, it is assessable as business income and not income from other sources. However, such receipt is not a part of export turnover as per Explanation 1(i) of section 10AA and accordingly, assessee himself has excluded the same in working out the export turnover but such receipt remains a part of the business income. The lower authorities by referring to the above explanation has wrongly inferred that such receipt is not a part of business ITA No.190 & 191/JP/2019 M/s Amrapali Exports, Jaipur Vs. DCIT, Jaipur income whereas the explanation only provides such receipt is not a part of export turnover. It nowhere states that such receipt is not part of business income. The Hon'ble Supreme Court in case of PCIT Vs. Vedansh Jewels Pvt. Ltd. (2018) 258 Taxman 154 dismissed the SLP filed by the department against High Court order where High Court upheld the Tribunal's order that surplus amount in freight export account and in insurance export account was derived from export activities eligible for deduction u/s 10AA. Hence, the assessee has correctly claimed the deduction u/s 10AA.

21. The ld DR is heard who has relied on the findings of the lower authorities.

22. We have heard the rival contentions and pursued the material available on record. In the instant case, the assessee has incurred freight, clearing and insurance expenses of Rs 19,22,902 in respect of export of goods and has recovered an amount of Rs 24,98,290 from its customers, thus there is an excess recovery of Rs 5,75,388 towards such expenses and such recovery has been reflected in the profit/loss account. In its computation of income for claiming deduction under section 10AA, the assessee has excluded such recovery of expenses from the export turnover as well as total turnover. Therefore, the limited issue is regarding whether such excess recovery of freight and other expense in respect of export of goods is derived from business and the eligible for deduction under section 10AA of the Act. We find the issue is squarely covered by the decision of the Hon'ble Rajasthan High Court in case of Pr. CIT, Jaipur vs. Vedansh Jewels (P.) Ltd. which the question of law admitted for consideration was as follows:

6.9 In light of above discussions and in the entirety of facts and circumstances of the case, we do not find any infirmity in the order of the ld. CIT(A) and confirm the allowance of exemption under section 10AA in respect of freight and insurance excess receipts. On parity of reason, the same position would hold good for misc. balance written off. In the result, the ground No. 1 of the revenue is dismissed."

Respectfully following the decision of the Hon'ble Rajasthan High Court, the ground of appeal is allowed.